Commercial Mortgages and Hard Money Loans Explained
Posted: Jan 12, 2021
Commercial Mortgages These types of loans are designed for income-producing properties, for example, shopping centers, office buildings, hotels, warehouses, etc… Obtaining a commercial mortgage is different from a traditional home loan, while residential mortgages are typically made for individual borrowers, commercial mortgages are made for businesses.
There are many options a business can choose from depending on its qualifications. A well-established business showing profits on the tax returns, good financials, and with all the documentation up to date, typically will qualify for the best terms and with a low down payment. On the other hand, a business with limited history and not the best financials most likely will need a 20% to 30% down payment. Commercial mortgages could be as low as 6% and terms ranging from 1 to 30 years. Many borrowers prefer to work with private lenders like GoKapital to avoid the red tape that goes along with traditional bank financing.
Another known fact to private investors is called "Commercial Hard Money", this generally applies to non-bankable transactions but the asset is sufficient to collateralize the lender.
For example, if an investor pays cash for a rehab apartment building and is running out of funds to continue the renovations. A traditional bank will not want to take on the risk of a no income-producing building loan however, a private lender will look at it differently and will lend 50% - 65% of the current value of the property.Hard Money LoansReal estate investors use this type of financing, it requires less documentation and credit requirements, since the loan is secured by real property. Hard money loans are also known as bridge financing and are very popular among property flippers being that one of the main advantages is fast closings. For investors, a smooth process is key to securing a good investment property. Hard money lenders usually have low LTV’s (Loan To Value) around 65% to 80% and interest could start around 9%. Keep in mind that these are short term loans and the main objective is to sell the property in a short period of time. Closing time could be anywhere between 2 to 4 weeks, there are always going to be closing fees plus points and yes they are always higher when compared to traditional mortgages.
These loans are a good fit for investors looking to close on a property quickly without the overwhelming documentation required by a traditional bank. Another advantage is that the borrower does not need to have extensive experience as long as the minimum requirements are met, the borrower will qualify. This makes it ideal for new investors.
Whether you are looking for a commercial mortgage or hard money these are the eligible types of properties: Single-family, Multi-family, Mixed-use, retails, apartment buildings, warehouses, industrial properties, churches, and even land (case by case)
For all your commercial mortgages, hard money, and foreign national real estate loans you can count on GoKapital, Inc a leader in the real estate industry. With headquarters in South Florida and helping clients nationwide with your transaction, you are handled by a team of professionals.
GoKapital is a business loan and private mortgage lender serving business owners and real estate investors in Usa. https://www.gokapital.com/